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Thursday, September 5, 2013

How Are Google's Product Listing Ads Performing?

Google’s Product Listing Ads (PLAs), which are enhanced search ads that include features such as price and image, received significant attention from marketers during the 2012 holiday season, according to a Marin Software study of advertisers who had made paid search buys through the Marin platform.

However, since December 2012, PLAs’ share of search ads has declined. In July 2013, 1.05% of text ads worldwide were PLAs, compared to 1.22% just two months earlier. This is likely to change as the 2013 holiday shopping season kicks into gear, and retailers increasingly opt for richer search ads.

While there has been some falloff in advertiser interest in the ads, the outlook for PLAs is good given that the ads do seem to garner higher clickthrough rates (CTRs) every month. In July 2013, the average CTR of these ads reached 1.66%, up from 1.00% in January 2012. The study specifically called out mobile shopping as a prime contributor to these increased clicks.

Costs per click are reaching progressively higher, though, up to $1.59 in July 2013, compared to $1.04 in July 2012. Rising prices may be encouraging advertisers to be more strategic in their PLA buys.

Comparing the share of clicks on PLAs vs. text ads, Marin Software found that while July saw a slight dropoff in clicks on the enhanced search ads, the overall trend seems to be toward more PLA clicks. PLAs took a 2.21% share of clicks in July 2013, still nearly double the 1.15% share PLAs garnered in the previous July.

The holiday shopping season seems to be when the greatest percentage of spending outlays go toward PLAs compared with text ads.

The percentage spent on PLAs remained below 2% between January through October 2012, and then jumped during the November and December 2012 shopping season. After the holidays, the share devoted to PLAs came down considerably but still stayed above 2%, and reached 3.03% in June 2013.

As the 2013 holiday shopping season gets underway, it seems clear enough that PLAs will have an even greater role to play in the search ad mix.